McGlashan: Weigh the potential risks against the benefits of clean energy

Marin Clean Energy's many risks must be balanced against benefits: an overall reduction in greenhouse gas production and an economic stimulus to Marin and surrounding areas, says Marin Supervisor Charles McGlashan.

Money that Marin residents are now paying to Pacific Gas and Electric Co. would instead be used to finance local generation projects, solar power installations and energy conservation projects, he said.

"With an $85 million local revenue stream, some of which can be used on local projects, suddenly there is an economic boom to Marin County," McGlashan said, referring to the amount of revenue that Marin Clean Energy's customers are expected to generate by 2013.

Critics argue it is unlikely that any large-scale generation projects would ever be built in Marin due to cost and neighborhood opposition. McGlashan said even if the projects are built in Sonoma or Napa counties, Marin businesses would benefit from a regional multiplier effect.

McGlashan said Marin Clean Energy will also help Marin County avoid spending taxpayer money to comply with a state law passed in 2006, AB 32, which requires that the state's greenhouse gas emissions be reduced to 1990 levels by 2020. Rules for enforcement of the law are still in the early stages of development by the California Air Resources Board.

But former Assemblyman Joe Nation, who has been hired by PG&E, noted that so far there has been no discussion of penalizing local governments if emission targets are missed.

"There is not a single entity that will be regulated; therefore there will be no direct costs," Nation said. "The costs will all be upstream - at the refineries, the utilities or the third-party generating facilities."

As for Marin Clean Energy's plan to build its own renewable energy generation projects, Marin County Treasurer Michael Smith said he believes that is the biggest risk of all.

"Should they get it wrong they don't have the ratepayer base to absorb the unexpected," Smith said.

The authority plans to borrow the money it needs for generation projects by issuing revenue bonds secured by ratepayer revenue. But Smith said given the weak state of the economy it is likely bond issuers will require additional guarantees. He worries that the county of Marin or other authority members may be asked to put taxpayer money at risk.

McGlashan agrees with Smith that the creation of energy generation projects will be the riskiest aspect of Marin Clean Energy.

"So special care would have to be taken," McGlashan said.

John Dalessi, a consultant for the Marin Energy Authority, said the authority's members have made it clear, however, that they have no intention of risking taxpayer money.

"That's not going to happen," he said.

A law firm hired by the cities of Oakland and Berkeley in 2008 concluded that a "joint powers authority could be structured to place a financial fire wall between community choice aggregation activities and the city's municipal corporation." That is what the Marin Energy Authority's legal counsel has done.

But the county of Marin has already guaranteed a $950,000 loan to help supply Marin Clean Energy with start-up capital. Three Marin residents - Harvey "Skip" Berg, a Sausalito developer and the former owner of Sears Point Raceway, and his wife Brenda Berg; Gwendolyn Grace of Tiburon; and Effie Westervelt of Mill Valley - have loaned the authority another $750,000 in return for an unsecured promissory note and interest of 5.75 percent per year.

The county of Marin has also spent $840,000 getting the Marin Energy Authority to where it is today. If Marin Clean Energy succeeds, the county will get $540,000 of that back.

The authority still needs to find another $500,000 to supply it with sufficient working capital until new customers begin paying their bills. The town of Fairfax has agreed to guarantee a $100,000 loan. The town will be paid about $7,300 for the guarantee, which will be effective for 15 months. The authority has not said where the remaining $400,000 will come from.

Berg, who has put $250,000 of his own money on the line, said now that the authority has signed its five-year contract with Shell North America, "The risk is going down every day."

"There is an opportunity here that is monumental," Berg said. "I think it would be a shame if the county lost the opportunity."